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India - Russian Relationship
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| 03. INVESTMENT UPDATES |
'Investor sentiment is very positive' |
| Source : The Economic Times |
 Davos: Foreign direct investment into India is looking set to be more than $25 billion, and FII inbound flows should be more than $25 billion, estimates Anand Sharma, commerce minister, though December formal figures aren’t out yet. Mr Sharma, who addressed a private session with over 50 foreign CEOs, told ET that investor sentiment towards India is very positive in the series of meetings he has had at Davos. “The money is already coming in, and investor sentiment is very positive,” he told ET.
Mr Sharma invited the gathered CEOs to invest in R&D and innovation in geo-technology in India, at the same time pointing out that FDI flows work both ways, and Indian companies are now going outbound and investing in other economies and creating jobs globally. He also defended India’s financial sector reform policies. “We leave the regulation of the financial sector to the RBI, and the events of the past two years have shown the wisdom of this approach,” he said.
Selling the India story, Mr Sharma reiterated that the unified FDI policy, currently under discussion, will subsume 177 Press Notes and be operational by March 31 to make things easier for foreign investors. In addition, he pointed to the government-industry initiative to invest in India, which will help foreign companies in individual sectors.
Mr Sharma said the biggest concern facing the world today is the recovery. While it is happening, is very weak in the developed markets. “It is universal, but not uniform,” he said. The worry is that this may affect our trade flows, but confidence in India is very high,” he said. And it’s also why he advocates a cautious, deliberate, and perhaps sector by sector approach to withdrawing economic stimuli. “Not all sectors have recovered, and these sectors need time, both globally and in India, we should look at a deliberate, cautious approach.”
India, he adds, has already discussed its trade imbalance with China, and he has received assurance from the Chinese government that this will be tackled. While at Davos, Mr Sharma will meet up with 23 other ministers for a mini-ministerial on the Doha WTO round, what he calls an informal meeting. “We will see where the negotiators stand now, and discuss things at an informal level,” he said.
Copyright © 2010, Bennett, Coleman & Co. Ltd. All Rights Reserved |
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Forex kitty up $899 m, touches $285 bn |
| The Economic Times: January 23, 2010 |
Mumbai : Foreign exchange reserves rose $899 million to touch $285.1 billion during the week ended January 15, largely on account of revaluation of non-dollar assets in reserves.
 The latest figures released by the Reserve Bank of India (RBI) on Friday indicate that the total foreign exchange reserves comprising foreign currency assets, gold and special drawing rights (SDR — reserves currency with the International Monetary Fund) rose $853 million reflecting valuation gains in non-dollar assets. The value of SDR and the reserve capital with the IMF rose $36 million and $10 million, respectively, during the week.
“The dollar had strengthened sharply against the euro during the week. As a result, the value of euro-denominated assets in reserves, which are expressed in dollars, have risen,”said a treasury official with a private bank, requesting anonymity. Almost 40% of the reserves are believed to be comprised in non-dollar assets, including the sterling pound, yen, euro and the yuan, though central banks don’t make their currency composition of reserves public.
In other developments, the central government has kept its respective ways and means advances (WMA) account with RBI vacant during the week ended January 8. WMA is a facility under which governments (states as well as the Centre) can borrow from the central bank to meet their daily revenue mismatches. While borrowing within the limit is at the prevailing repo rate, borrowings above the agreed limit — between the government and RBI — is at 2% higher than the repo rate.
State governments availed of Rs 72 crore higher during the week under this facility, taking their outstanding WMA balances to Rs 75 crore as on January 15. |
Global brands make a beeline for India livemint.com |
| January 26, 2010 |
The organized apparel market is growing at 20% per annum, making it an attractive stop for international retailers
Mumbai : A year after the exit of brands such as Levi Strauss and Co.’s Dockers range, Grotto SpA’s GAS apparel and French lingerie label Etam, a new lot of fashion retailers are set to enter India with an eye on the wallets of affluent consumers.
Zara, the fashion label owned by Inditex SA of Spain, UK garment chain Topshop, the Marc Ecko clothing line promoted by the US entrepreneur of the same name and the Japanese casual wear brand Uniqlo are preparing to open outlets in India.
They are among two dozen fashion brands expected to enter India this year to try their luck in an apparel market that Anand Raghuraman, a partner and director at Boston Consulting Group, estimates at Rs1.3 trillion and expanding at a yearly 10%.
“Moreover, over 20% of this industry, at Rs30,000 crore, is (controlled by) organized apparel retailers and growing at 20% per annum, making it an attractive destination for global retailers,” says Raghuraman.
Following the global meltdown, and as part of a change in its market strategy, Levi Strauss phased Dockers out of the Indian market last year to concentrate on denimwear.
GAS, introduced in India by Mumbai-based apparel retailer Raymond Ltd in a 50:50 joint venture with Grotto, shut its 12 stores. Etam ended its joint venture with Future Group.
The influx of retailers coincides with a growth revival in India. Asia’s third-largest economy grew 7.9% in the quarter ended September, the fastest pace in five quarters.
“There is a huge global interest in India,” says Kumar Rajgopalan, CEO of Retailers Association of India.
Departmental store chain Shoppers Stop plans to launch the Playboy brand and around six other international labels in Indian market in the coming year, according to Boston Consulting Group. The S Kumar’s group, through its unit Brandhouse Retails, will launch the Italian apparel brand Oviesse.
French haute couture house Nina Ricci and shoemaker Christian Louboutin and Italian fashion label Max Mara are also eyeing India, according to Boston Consulting.
To be sure, not all the brands that vie for consumers’ cash in India will succeed, given their inexperience in a market in which preferences vary widely. “The year will see all kinds of brands—large and niche—setting up here. But they will not all succeed in India as they won’t understand the market,” says Raghuraman.
Zara stores will be opened in India under a February 2009 agreement between Inditex and Trent Ltd, the Tata group’s retail arm. “We will open five stores in New Delhi, Mumbai and other major cities,” Inditex’s corporate communication and institutional relations division said in a reply sent to an email query.
Marc Ecko will launch the brand in the coming spring in a partnership with RPG Group’s retail flagship Spencer’s Retail Ltd, which plans to have in place at least five international alliances this year.
Emails sent to Tokyo-based Uniqlo Co. Ltd and Arcadia Group Ltd, the UK’s largest privately owned clothing retailer that owns the Topshop brand, remained unanswered.
Besides clothing brands, speciality retailers across the spectrum—from shoes and toys to electronics—are interested in tapping the Indian market. Domestic retailers are equally keen to collaborate with global players.
“We are talking to a lot of people from super luxury, luxury to value and will collaborate with leaders,” says Raghu Pillai, chief executive officer of Reliance Retail Ltd, the retail arm of Reliance Industries Ltd.
The firm already has partnerships with retailers such as Marks and Spencer Group Plc and Office Depot Inc.
Recently, Reliance Retail announced a joint venture with Japanese shoe major ASICS Corp. and will also soon open a 2,000 sq. m toy store in association with British toy retailer Hamleys Plc.
Barcelona-based maker of jeans and sportswear Desigual, which earns €300 million (Rs1,962 crore today), or 85% of its revenue, from Europe alone, plans to expand into Asia this year as it seeks geographical diversification.
“Later this year, we will enter Japan and after that we may either enter India or China. But it is most likely to be India before China,” said Nikhil Nathwani, who has the title market entrance at the clothier and is overseeing its Asia push. “We expect Asia, America and Europe to account for one-third each of our overall revenues in the next five years.” |
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T Rowe buys 26% in UTI AMC, UTI Trustee for Rs 650 crore
Mumbai : US-Based investment management firm T Rowe Price Group, or TRP, has bought a 26% stake in UTI Asset Management Company (AMC) and UTI Trustee Company for Rs 650 crore, giving it a stake in the India’s fourth-largest fund house and a chance to profit from the fast-growing Indian mutual fund industry.
The deal values the country’s oldest mutual fund house at Rs 2,500 crore or about 3.6% of its assets under management. The NYSE-listed firm has acquired 6.5% each from the existing four owners of UTI AMC — State Bank of India (SBI), Life Insurance Corporation of India (LIC), Bank of Baroda (BoB) and Punjab National Bank (PNB).
After the stake sale, the existing owners referred to as sponsors will now retain a stake of 18.5% each in UTI AMC.
The UTI AMC board has been reconstituted, with directors James S Riepe and Flemming Madsen representing the new investor inducted on the board. Officials of T Rowe Price have already dropped into UTI’s offices, as the global fund starts to integrate its systems and process with UTI MF. Last week, the heads of Global and international equities spent four days in UTI’s offices meeting with management and every member of the equity team, as the US fund tries to size up the staff, organisation and investment processes of its Indian affiliate.
Two T Rowe Price officials specialising in fixed income or debt have also carried out a similar exercise. Technology and operation management professionals from both firms have also begun discussing UTI’s investment systems, data management and hardware. TRP’s sales and marketing professionals are evaluating opportunities to launch offshore funds to attract overseas investors hoping to benefit from the fast-growing Indian economy.
Officials from both companies said the tie-up heralded a new beginning for an earlier avatar which went bust in the early years of the current century and had been rescued by the government. UTI was then split into two parts, one of which, consisting of schemes promising assured returns, was housed in a government-owned entity. The other, UTI AMC, became a normal mutual fund regulated by capital market regulator Sebi and competing with fund houses such as Reliance and HDFC.
“UTI will be henceforth evaluated as an organisation before this day and after this day,” said UK Sinha, CMD of UTI Asset Management Company.
Commenting on the relationship, James AC Kennedy, CEO and president of T Rowe Price Group, said: “We are confident that UTI and T Rowe Price will be a powerful combination. Our respective management teams, cultures and values fit very well together.”
“The most-compelling force behind this relation is the strong management team of UTI AMC,” said Edward C Bernard, vice-chairman, T Rowe Price Group. As on December 31, 2009, UTI MF managed about Rs 78,000 crore across its debt and equity schemes. Total assets managed by T Rowe Price group of companies world-wide stood at $366 billion as on September 30, 2009.
“We expect significant synergies in fund management, research, product development and technology with T Rowe Price and look forward to offering sophisticated products and services to our investors,” Mr Sinha said. “This benefits our overall strategy by dramatically enhancing our exposure to and opportunity in India, which, we believe, will be a very large and important market for mutual funds over time. Our plan in India will focus on collaborating with UTI to enhance investment and distribution capabilities and thus strengthen their leadership position, which will benefit us as a shareholder. We also believe UTI’s expertise in India will be additive to our investment activities,” said Mr Edward.
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